Presentation is loading. Please wait.

Presentation is loading. Please wait.

Bitcoin will Bite the Dust Kevin Dowd and Martin Hutchinson 32 nd Annual Cato Monetary Conference Washington DC November 6 2014.

Similar presentations


Presentation on theme: "Bitcoin will Bite the Dust Kevin Dowd and Martin Hutchinson 32 nd Annual Cato Monetary Conference Washington DC November 6 2014."— Presentation transcript:

1 Bitcoin will Bite the Dust Kevin Dowd and Martin Hutchinson 32 nd Annual Cato Monetary Conference Washington DC November

2 How Bitcoin Works Payment system based on distributed trust Bitcoin miners compete to validate transactions blocks Miners rewarded with new bitcoins and fees Competition between miners ensures integrity of system 2

3 Bitcoin’s Value Proposition Decentralized trust – Maintains integrity of system, prevents double-spend attacks etc. – No need to trust any one party to keep promises No single point of failure Potential for anonymous transactions Incentive-compatibility Tamper-proof Bitcoin protocol operates as a Bitcoin ‘constitution’ – Prevents over-issue of bitcoins etc. 3

4 Fundamental Contradiction of the Bitcoin System The system requires competitive mining to maintain its integrity BUT the Bitcoin mining industry has the structure of a natural monopoly These are incompatible Therefore Bitcoin is unsustainable Therefore Bitcoin must collapse 4

5 Collapse of Bitcoin’s Value Proposition No more decentralized trust – System depends on big pool(s) not to abuse their power – Back to the old trust model – Takeover of system by large player(s) A single point of failure No more anonymous transactions Large player(s) can corrupt Bitcoin protocol 5

6 Snapshot from Ghash.IO’s Homepage 6

7 Ghash 7

8 Implications Collapse of its value proposition is fatal Nothing to shore up confidence in the system Will produce a run on Bitcoin, collapse in price, abandonment of system Not if but when … and probably soon Our advice? Get out now 8


Download ppt "Bitcoin will Bite the Dust Kevin Dowd and Martin Hutchinson 32 nd Annual Cato Monetary Conference Washington DC November 6 2014."

Similar presentations


Ads by Google